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AN ACT Relating to small business tax relief; amending RCW 82.04.4451, 82.32.045, and 82.16.040; reenacting and amending RCW 82.32.030; adding a new section to chapter 82.04 RCW; and providing an effective date.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

Sec. 1. RCW 82.04.4451 and 1994 sp.s. c 2 s 1 are each amended to read as follows:

(1) In computing the tax imposed under this chapter, a credit is allowed against the amount of tax otherwise due under this chapter, as provided in this section. The maximum credit for a taxpayer for a reporting period is ((~~thirty-five~~)) fifty dollars multiplied by the number of months in the reporting period, as determined under RCW 82.32.045.

(2) When the amount of tax otherwise due under this chapter is equal to or less than the maximum credit, a credit is allowed equal to the amount of tax otherwise due under this chapter.

(3) When the amount of tax otherwise due under this chapter exceeds the maximum credit, a reduced credit is allowed equal to twice the maximum credit, minus the tax otherwise due under this chapter, but not less than zero.

NEW SECTION. Sec. 2. A new section is added to chapter 82.04 RCW to read as follows:

(1) In computing the tax imposed under this chapter, a new business may claim a credit under this section or under RCW 82.04.4451, but may not claim a credit under both this section and RCW 82.04.4451. A credit is allowed for a new business during its first thirty-six months of operation against the amount of tax otherwise due under this chapter, as provided in this section. The maximum credit for a taxpayer for a reporting period is one hundred dollars multiplied by the number of months in the reporting period, as determined under RCW 82.32.045.

(2) When the amount of tax otherwise due under this chapter is equal to or less than the maximum credit, a credit is allowed equal to the amount of tax otherwise due under this chapter.

(4) As used in this section:

(a) "New business" means a business that obtained or was required to obtain a registration certificate under RCW 82.32.030 for the first time during the thirty-six months immediately preceding the date on which exemption is first claimed under this chapter.

(b) "New business" does not include:

(i) A business that has been restructured, reorganized, or transferred, unless the majority of the activities to be conducted after restructuring, reorganization, or transferral are significantly different from the activities previously conducted;

(ii) A new branch location or other facility except by an existing out-of-state entity first doing business in this state;

(iii) A business that is substantially similar to a business currently operated, or operated within the past five years, by the same principals.

The department may require a new business to certify its status as part of its master business application, or with the first tax return claiming exemption under this section.

Sec. 3. RCW 82.32.030 and 1994 sp.s. c 7 s 446 and 1994 sp.s. c 2 s 2 are each reenacted and amended to read as follows:

(1) Except as provided in subsection (2) of this section, if any person engages in any business or performs any act upon which a tax is imposed by the preceding chapters, he or she shall, under such rules as the department of revenue shall prescribe, apply for and obtain from the department a registration certificate. Such registration certificate shall be personal and nontransferable and shall be valid as long as the taxpayer continues in business and pays the tax accrued to the state. In case business is transacted at two or more separate places by one taxpayer, a separate registration certificate for each place at which business is transacted with the public shall be required. Each certificate shall be numbered and shall show the name, residence, and place and character of business of the taxpayer and such other information as the department of revenue deems necessary and shall be posted in a conspicuous place at the place of business for which it is issued. Where a place of business of the taxpayer is changed, the taxpayer must return to the department the existing certificate, and a new certificate will be issued for the new place of business. No person required to be registered under this section shall engage in any business taxable hereunder without first being so registered. The department, by rule, may provide for the issuance of certificates of registration to temporary places of business.

(2) Unless the person is a dealer as defined in RCW 9.41.010, registration under this section is not required if the following conditions are met:

(a) A person's value of products, gross proceeds of sales, or gross income of the business, from all business activities taxable under chapter 82.04 RCW, is less than twelve thousand dollars per year;

(b) The person's gross income of the business from all activities taxable under chapter 82.16 RCW is less than twelve thousand dollars per year;

(c) The person is not required to collect or pay to the department of revenue any other tax or fee which the department is authorized to collect; and

((~~(c)~~)) (d) The person is not otherwise required to obtain a license subject to the master application procedure provided in chapter 19.02 RCW.

Sec. 4. RCW 82.32.045 and 1983 2nd ex.s. c 3 s 63 are each amended to read as follows:

(1) Except as otherwise provided in this chapter, payments of the taxes imposed under chapters 82.04, 82.08, 82.12, 82.14, and 82.16 RCW, along with reports and returns on forms prescribed by the department, are due monthly within twenty-five days after the end of the month in which the taxable activities occur.

(2) The department of revenue may relieve any taxpayer or class of taxpayers from the obligation of remitting monthly and may require the return to cover other longer reporting periods, but in no event may returns be filed for a period greater than one year. For these taxpayers, tax payments are due on or before the last day of the month next succeeding the end of the period covered by the return.

(3) The department of revenue may also require verified annual returns from any taxpayer, setting forth such additional information as it may deem necessary to correctly determine tax liability.

(4) The department may relieve any person of the requirement to file returns if the following conditions are met:

(a) The person's value of products, gross proceeds of sales, or gross income of the business, from all business activities taxable under chapter 82.04 RCW, is less than twenty-four thousand dollars per year;

(b) The person's gross income of the business from all activities taxable under chapter 82.16 RCW is less than twenty-four thousand dollars per year; and

(c) The person is not required to collect or pay to the department of revenue any other tax or fee which the department is authorized to collect.

Sec. 5. RCW 82.16.040 and 1961 c 15 s 82.16.040 are each amended to read as follows:

The provisions of this chapter shall not apply to persons engaging in one or more businesses taxable under this chapter whose total gross income is less than ((~~five hundred~~)) two thousand dollars for a monthly period or portion thereof. Any person claiming exemption under this section may be required to file returns even though no tax may be due. If the total gross income for a taxable monthly period is ((~~five hundred~~)) two thousand dollars, or more, no exemption or deductions from the gross operating revenue is allowed by this provision.

NEW SECTION. Sec. 6. This act shall take effect July 1, 1996.